Fixing interest rate

Discussion in 'Loans & Mortgage Brokers' started by milobear, 19th Mar, 2017.

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  1. milobear

    milobear Well-Known Member

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    Hi,

    As you all know interest rate are to due rise this year. We have already seen two of the major banks increase by 23-28 basis points and this will only trend up.

    Do you think it's the best time to fix your loan now as we will only see rate rising in the coming year? I know it depends on an individuals circumstance but If I'm not looking at selling or refinancing in the next couple of years, I think it would be good to fix them now.

    What other implications or limitations are there for fixing a loan?

    I'm looking at doing a 20/80 fixed so I can still utilise my offset account. Fixing will also grant me 0.28% lower rate compared to the variable rate I'm on now. Could the advertised fixed rate generally be negotiated lower?

    Currently the 2 years fixed rates give the best rate, however, in a long term view would it be better to fix it for 3-5 years at a higher rate? Fixing for 2 years would grant a lower rate compared my current variable rate, however, 3 years would be equal and 5 years would be higher than my current variable rate.

    Thoughts on fix periods?

    Thanks
     
  2. r3ckless

    r3ckless Well-Known Member

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    Broadly speaking. 2-3 terms look good to be. Looking at rates at cba.

    Assuming 3 years as an example. I would consider how much cash i would put aside over three years, and mks that amount the variable portion.

    HTH
     
  3. Jenko

    Jenko Well-Known Member

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    I just fixed all my investment loans for 3 years at similar to what I'm paying now. Was tempting to fix for two year which would put $50 pw into my pocket but I just didn't think it was long enough in my circumstance. Just fingers crossed things turn around before the end of the three years.
     
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  4. dabbler

    dabbler Well-Known Member

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    Do you have loans at all ?

    Been going up since lending changes came in.
     
  5. milobear

    milobear Well-Known Member

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    Not sure about you, but in the past 12 months I've only had rate drops. First increase for me was in December.
     
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  6. paulF

    paulF Well-Known Member

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    Was planning on fixing my rates too but thought i'd wait a little bit until the dust settles a bit.
    It's true that the US Fed will be raising rates but the RBA is in a totally different position so they might have to cut and hence the private banks might keep their rates steady.
     
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  7. dabbler

    dabbler Well-Known Member

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    Nope, multiple rises, across multiple lenders, there were rises when APRA came in, just because RBA cut does not mean you can ignore the rises or lack of passing on RBA cuts.

    I think people have very short memory spans or have IP loans as PPOR loans, or other.

    The trend is up.
     
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  8. Tom Simpson

    Tom Simpson Well-Known Member

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    The trend is upwards.

    Generally speaking you won't be able to negotiate much if at all on fixed rates, depends on the bank and circumstances though.

    Speak to one of the many qualified brokers on this forum to discuss if fixing is right for you.
     
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  9. Redom

    Redom Finance Strategist Business Member

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    If moving to a consolidation phase of investing (i.e. limiting purchase activity, looking for cost consolidation, etc) - than fixing is worthy of more investigating given the current pricing differential between the two. We're seeing more and more of a take up of fixed rates now as the incentives for variable vs fixed are changing.

    There's also a couple variable rate loan options that obtain OO rates (<4%) if you have both securities (no need to be crossed) - thats another way to cost consolidate but maintain loan flexibility.
     
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  10. paulF

    paulF Well-Known Member

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    Worth fixing if planning in the next year or so?
     
  11. Corey Batt

    Corey Batt Well-Known Member

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    Depends what you're planning. ;)
     
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  12. paulF

    paulF Well-Known Member

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    Lol @Corey Batt !!
    Sorry , i meant i plan on selling in the next year or so!
     
  13. Ross Forrester

    Ross Forrester Well-Known Member Business Member

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    I don't like fixing - you are basically taking a bet against the banks about interest rate direction.

    Long term you will pay more interest.

    If you are totally maxed out it could be an idea.
     
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  14. tobe

    tobe Well-Known Member

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    Then no, don't fix.
     
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  15. KayTea

    KayTea Well-Known Member

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    After all the talk of rates going up, I'm thinking of fixing my IO loans, too.

    I've just been told that I can fix these by filling in a loan variation form (only - no need to reapply for anything), and these are the rates on offer for IPs:
    - 1 year = 4.24%
    - 2 years = 4.34%
    - 3 years = 4.44%
    - 5 years = 4.64%

    Any feedback or suggestions?
     
  16. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Yes - if you're on a MAV package your rates will be lower than that. I'm assuming that's CBA? Also pricing discretion can knock a little more off again.

    It is just a form with many lenders, very easy. If you can't be bothered going into the bank, your broker can do it all over email.
     
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  17. KayTea

    KayTea Well-Known Member

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    Thanks, Jess - it's not CBA, it's Suncorp.

    Is it worth ringing them, or going into a branch, and trying to negotiate something a bit lower (I have a lot of my lending with them)? Are lenders ever willing to negotiate rates?
     
  18. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Yes some are - I'm not sure about Suncorp though, I don't do much through them. It's always worth a shot! :)
     
  19. paulF

    paulF Well-Known Member

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    You mean when fixing for the long term Ross?
     
  20. Ross Forrester

    Ross Forrester Well-Known Member Business Member

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    Yes
     
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